DESCRIPTION: The central goal of this research is to analyze how public policies affect saving behavior and the financial status of the elderly. A particular goal is to assess the effects of government tax and spending policies within a well-specified simulation model of household saving. A related goal is to examine the impact of pensions on household wealth accumulation. Another related goal is to examine the adequacy of households' preparations for retirement, and the factors that cause households to save inadequately. To achieve these long-term objectives, the research has several specific aims: (1) To examine the effects of pensions on household wealth accumulation. Prior research contains a series of econometric problems, each of which biases the results toward showing that the estimated effect of pensions on other wealth is more positive than the true effect. Many of the biases can be corrected and doing so can materially affect the results. The research would extend the theoretical analysis and, using improved data, apply the empirical work to different population groups. (2) To extend earlier work modeling government policies using a life-cycle simulation model, where households save for retirement and as a precaution against uncertain income and mortality risk. New research would expand the model to include endogenous retirement choices, uncertain asset returns, and other features. (3) To use the simulation model to examine the long-term and transitional effects of a variety of social security reforms. (4) To model how much households should be saving during their working years to preserve their pre-retirement living standards in retirement. In contrast to most "financial planning" frameworks, the investigators incorporate uncertainty about wages, lifespan, and rates of return. In conjunction with empirical work, the results will help show which groups are at risk, to what extent, why, and what policies could help. (5) To use the simulation model to develop new tests of the impact of saving incentives on saving by comparing the empirical patterns in the simulation model, where saving incentives provide virtually no net new saving during the first 15 years, to observed saving patterns of households with and without saving incentives in various data sets.